U.S. GOVERNMENT PUBLISHING OFFICE

WASHINGTON : 

1 

49–010 

" ! SENATE 113TH CONGRESS

2d Session 

REPORT

2014

113–306 

MEDICARE PART D—PRESCRIPTION DRUG 

BENEFIT: INCREASING USE AND ACCESS 

OF AFFORDABLE PRESCRIPTION DRUGS 

A R E P O R T 

OF THE

SPECIAL COMMITTEE ON AGING 

UNITED STATES SENATE 

DECEMBER 11, 2014.—Ordered to be printed 


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SPECIAL COMMITTEE ON AGING 

BILL NELSON, Florida, Chairman 

BOB CASEY, Pennsylvania 

CLAIRE MCCASKILL, Missouri 

SHELDON WHITEHOUSE, Rhode Island 

KIRSTEN GILLIBRAND, New York 

JOE MANCHIN, West Virginia 

RICHARD BLUMENTHAL, Connecticut 

TAMMY BALDWIN, Wisconsin 

JOE DONNELLY, Indiana 

ELIZABETH WARREN, Massachusetts 

JOHN WALSH, Montana 

SUSAN COLLINS, Maine 

Ranking Member 

BOB CORKER, Tennessee 

ORRIN HATCH, Utah 

MARK KIRK, Illinois 

DEAN HELLER, Nevada 

JEFF FLAKE, Arizona 

KELLY AYOTTE, New Hampshire 

TIM SCOTT, South Carolina 

TED CRUZ, Texas 

KIM LIPSKY, Staff Director 

PRISCILLA HANLEY, Ranking Member Staff Director 


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LETTER OF TRANSMITTAL 

U.S. SENATE, 

SPECIAL COMMITTEE ON AGING, 

Washington, DC, December 11, 2014. 

Hon. JOE BIDEN, 

President, U.S. Senate, 

Washington, DC. 

DEAR MR. PRESIDENT: Under authority of Senate Resolution 253 

agreed to on October 3, 2013, I am submitting to you a report of 

the U.S. Senate Special Committee on Aging entitled: Medicare 

Part D Prescription Drug Benefit: Increasing Use and Access of Affordable Prescription Drugs. 

Senate Resolution 4, the Committee Systems Reorganization 

Amendments of 1977, authorizes the Special Committee on Aging 

‘‘to conduct a continuing study of any and all matters pertaining 

to problems and opportunities of older people, including but not 

limited to, problems and opportunities of maintaining health, of assuring adequate income, of finding employment, of engaging in productive and rewarding activity, of securing proper housing and, 

when necessary, of obtaining care and assistance.’’ Senate Resolution 4 also requires that the result of these studies and recommendations be reported to the Senate annually. 

I am pleased to transmit this report to you. 

Sincerely, 

BILL NELSON, Chairman. 


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C O N T E N T S 

Page 

Executive Summary ................................................................................................. 1 

Objectives and Methodology ................................................................................... 4 

Background .............................................................................................................. 5 

Beneficiary Enrollment and the Low Income Subsidy Program ................... 5 

Generic Dispensing Rates ................................................................................ 5 

Plan Formularies ..................................................................................................... 7 

Plan Sponsors’ Prescription Drug Coverage Decisions .................................. 7 

Benefit Design .................................................................................................. 7 

Generic Drugs are Available in Plan Formularies ........................................ 10 

Pharmacy & Therapeutics Committees May Not be Free of Conflicts 

of Interest ...................................................................................................... 11 

Drug Manufacturers Rebates Are Different for LIS Beneficiaries ............... 12 

Other Factors ........................................................................................................... 13 

CMS Plan Finder Design ................................................................................. 13 

Beneficiary Education ...................................................................................... 15 

Physician Prescribing and Pharmacy Billing Practices ................................ 20 

Conclusion ................................................................................................................ 25 

Appendix 1—Committee Letter to HHS OIG ........................................................ 26 

Appendix 2—HHS OIG Response to Committee ................................................... 27 


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1MedPAC, Report to the Congress: Medicare Payment Policy, March 2013, p. 333 (online at 

http://www.MedPAC.gov/documents/Mar13_entirereport.pdf). 2The Boards of Trustees, Federal Hospital Insurance and Federal Supplementary Medical Insurance Trust Funds, 2014 Annual Report of the Boards of Trustees of the Federal Hospital Insurance and Federal Supplementary Medicare Insurance Trust Funds, p. 198. 3 Jack Hoadley, Medicare Part D Spending Trends: Understanding Key Drivers and the Role 

of Competition, Kaiser Family Foundation Issues Brief, May 2012, p. 1. 

113th CONGRESS REPORT " ! SENATE 2d Session 113–306 

MEDICARE PART D—PRESCRIPTION DRUG BENEFIT: INCREASING USE AND ACCESS OF AFFORDABLE PRESCRIPTION DRUGS 

DECEMBER 11, 2014.—Ordered to be printed 

Mr. NELSON, from the Special Committee on Aging, 

submitted the following 

R E P O R T 

EXECUTIVE SUMMARY 

Since 2006, millions of Medicare beneficiaries have had access to 

outpatient prescription drugs through Medicare Part D, enacted as 

part of the Medicare Prescription Drug Improvement and Modernization Act of 2003.1 For the 2014 plan year, approximately, 

40.7 million beneficiaries were enrolled in Medicare Part D.2 Under 

the program, private health insurance companies compete for beneficiaries by offering drug coverage plans at competitive prices. Although costs for the Part D program have been lower than originally projected,3 the program accounts for more than 10 percent of 

total Medicare costs. This report shines a spotlight on a significant 

factor that has checked growing costs in the program—beneficiaries’ use of generic drugs—and explores ways to further increase the use of generic drugs. 

In conducting our work, we requested information from the US 

Department of Health and Human Services Office of the Inspector 

General (HHS OIG), reviewed available past reports and scientific 

literature, and conducted interviews with relevant agencies and industry leaders. 


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4 Congressional Budget Office, Effects of Using Generic Drugs on Medicare’s Prescription Drug 

Spending, September 2010, p.1. 5 id at p.10. 6 id at p. 11 . 7MedPAC, March 2013, supra at p. 355. 8 Hoadley, J. F., Merrell, K., Hargrave, E., & Summer, L., In Medicare Part D Plans, Low or 

Zero Copays and Other Features to Encourage the Use of Generic Statins Work, Could Save Billions, Health Affairs 31, No. 10 (2012): 2266–2275, p. 2266. 9 id. 

10The Boards of Trustees, Federal Hospital Insurance and Federal Supplementary Medical Insurance Trust Funds, 2014 Annual Report of the Boards of Trustees of the Federal Hospital Insurance and Federal Supplementary Medicare Insurance Trust Funds, p. 150. 

Using generic drugs results in savings for taxpayers and beneficiaries 

As the number of generic manufacturers for any given drug in 

the market multiplies, price-competition among them increases, 

and the average price of the generic drug relative to that of the 

brand-name drug declines. On average, the retail price of a generic 

drug is 75 percent lower than the retail price of a brand-name 

drug.4 This competition translates into real savings for both taxpayers and beneficiaries. The Congressional Budget Office (CBO) 

estimated the use of generic drugs in the Part D program saved 

beneficiaries and taxpayers approximately $33 billion during 2007; 

approximately 72 percent ($24 billion) of those savings accrued to 

the Medicare program and 28 percent ($9 billion) went to beneficiaries.5 CBO estimates that such savings are shared by beneficiaries and the Part D program through a combination of lower 

copayments and lower premiums than would have been charged 

otherwise.6

Generics have contributed to real-time, year-by-year savings to 

the Part D program and its participants. The Medicare Payment 

Advisory Commission (MedPAC) found that while prices of individual Part D prescription drugs grew by an average of 23 percent 

between 2006 and 2010, when accounting for generic substitution, 

Part D drug prices grew over the same time by an average of just 

2 percent.7 Just as important, patients are more likely to stick with 

their prescription drug treatment plans if they are using lower-cost 

generics in place of brand-name drugs.8 And, patients who follow 

their treatment plans have better health outcomes because they 

can properly manage their conditions, reducing the incidence of 

hospital stays and emergency-department visits.9

Challenges that must be addressed to gain further savings 

Continuing to incentivize the use of generic drugs by Part D 

beneficiaries, when appropriate in their treatment plans, would 

boost cost-savings both to beneficiaries and taxpayers. When considering policy changes, it is important that greater incentives to 

use generic drugs do not make access to necessary brand-name 

drugs more difficult. 

The most recent Medicare trustees report found that generic 

drug use accounted for 84 percent of all Part D drug use during 

2013, up from 81 percent in 2012.10 Over the past seven years, 

Part D expenditures have increased by an annual rate of 5.7 percent in the aggregate and only 0.5 percent on a per-enrollee basis. 

These results reflect the rapid growth in enrollment since the Part 

D program began, a substantial increase in the proportion of prescriptions filled with low-cost generic drugs, and patent expiration 


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11 id. at p. 109. 

for some major drugs in 2012.11 While the proportion of generic 

drug use has increased over time, several factors should be addressed in order to further this trend. These include: • Incentivizing and supporting plan sponsors to not only include generic drugs on plan formularies, but also to proactively 

promote the maximum use of generic alternatives where appropriate. Currently, most plan sponsors offer a full array of generic alternatives, but they are not required to do so, leaving 

a small number of plan formularies that do not maximize generic offerings. In addition, there are no mechanisms that reward or incentivize plan sponsors that have undertaken successful strategies to further increase generics use. Encouraging 

value in Part D plans as much as possible will be increasingly 

important in coming years. • Finding ways to increase the adoption of generic drugs 

among beneficiaries that receive Low Income Subsidy (LIS) 

benefits. Generally, insurance companies have been successful 

at encouraging enrollees to use generic alternatives when 

available in part because there are large differences in copays 

between brand and generic drugs. However, in the LIS population, these cost differences do not exist; their copays are set 

by statute. Innovative methods to improve use of generic drugs 

in this population, while still ensuring full access for this vulnerable population, must be explored. • Improving education among beneficiaries and health professionals. There continues to be a need to educate beneficiaries and health professionals on the efficacy of generic 

medications and incentivizing them to substitute brand-name 

drugs for generic drugs, when appropriate. • Maximizing program integrity efforts at pharmacies. In 

some situations, questionable pharmacy billing practices could 

thwart efforts that have been made to incentivize generics. 

HHS OIG, the Government Accountability Office, and others 

have identified important program controls in the Part D program that could be improved. 

This report’s focus is solely on those levers within the Part D 

program that can be adjusted to more effectively incentivize 

generics. The Committee heard from many stakeholders about additional factors outside the Part D program, such as the biologics 

exclusivity period, which will impact the overall availability of generic drugs, and the ability to substitute similar drugs. Further, 

issues within the generics market itself remain outstanding issues 

for policymakers. These include the continuing drug shortage crisis 

that most often affects generic drug supply and recent spikes in 

pricing for certain generic drugs. It is undeniable that there is now 

a lesser-known but growing and seemingly paradoxical phenomenon: certain older drugs, many of which are generic and not 

protected by patents or market exclusivity, have experienced dramatic price increases. The reasons behind recent price hikes warrant more study, as does continued vigilance regarding drug shortages. However, such factors are outside the scope of this report. 

It is the Committee’s hope that this report can help Members of 

Congress and the health care community to develop and implement 


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policies and practices that promote greater adherence and access to 

affordable, quality prescription drugs in the Part D program. 

OBJECTIVES AND METHODOLOGY 

Under the Medicare Part D program, private health insurance 

companies compete for beneficiaries’ business by offering drug coverage plans at competitive prices. While successful in many ways, 

the Part D program has grown significantly in size and complexity 

since the first year of open enrollment began. Along with the federal government’s investment, beneficiaries also pay for the program through insurance premiums and copayments for the prescriptions they fill. Given the program’s considerable price tag to 

Medicare ($69.7 billion during 2013) and beneficiaries, seeking responsible ways to continue to contain costs and ensuring that the 

program is as efficient as possible for beneficiaries are top priorities for the Aging Committee. One way to contain costs without 

jeopardizing access to needed care is to continue to look for ways 

to substitute brand-name drugs for generic drugs, when appropriate. 

Our review focused on identifying factors that impact Part D 

beneficiaries’ use of generic drugs as well as developing strategies 

to further increase the use of generic drugs. Our analysis focused 

on two main areas: 

1. Plan formularies, including the availability of generic 

drugs within the plans, benefit design, and program tools used 

by plan sponsors; and 

2. Other factors—such as website design for CMS’s Plan 

Finder, beneficiary, physician, and pharmacy preferences and 

practices—that could impact the beneficiaries’ use of generic 

drugs. 

We undertook a study of 2013 plan formularies to assess whether 

generic equivalents were widely and equally available among all 

beneficiaries (regardless of income status). Because beneficiaries in 

the Low Income Subsidy (LIS) population have a lower rate of generic drug use than in the rest of the population, we asked the Department of Health and Human Services Office of the Inspector 

General (HHS OIG) to analyze plan formularies and to offer potential explanations of factors that may contribute to lower generic 

drug use among this population. For the Committee’s request, see 

Appendix 1 and for HHS OIG’s response, see Appendix 2. 

We also conducted a comprehensive review of generic drug utilization and current program tools used by plan sponsors to 

incentivize generics use. We identified consumer perception and 

education, pharmacy billing, and physician prescribing as other factors that could impact the beneficiaries’ use of generic drugs. To 

analyze these other factors and their impact on generic-drug use, 

we reviewed a comprehensive body of literature both from investigative sources including the HHS OIG and the Government Accountability Office (GAO), and from a broader review of scientific 

literature. Finally, we solicited comments from external stakeholders on strategies that incentivize lower-cost generic-drug use. 


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12MedPAC, Report to Congress: Status Report on Part D, March 2014, Chapter 14, p. 355 (online at http://www.medpac.gov/documents/Mar14_entirereport.pdf). 13 id. 14 id. 15 Hoadley, J., Summer, L., Hargrave, E. & Cubanski, J., Medicare Part D Prescription Drug 

Plans: The Marketplace in 2013 and Key Trends, 2006–2013, Kaiser Family Foundation Issues 

Brief, December 11, 2013 (online at http://kff.org/medicare/issue-brief/medicare-part-d-prescription-drug-plans-the-marketplace-in-2013-and-key-trends-2006-2013/). 16See Kaiser Family Foundation. Medicare Prescription Drug Benefit Fact Sheet, November 

19, 2013 (online at http://kff.org/medicare/fact-sheet/the-medicare-prescription-drug-benefitfact-sheet/). To qualify for the LIS, income must be less than 150 percent of the Federal poverty level ($17,235 for individuals during 2013), and assets must be less than $13,300 for an individual. Individuals can apply for the LIS program through Social Security Administration or 

Medicaid. 17Medicare automatically enrolls these beneficiaries into a ‘‘benchmark plan.’’ A benchmark 

plan is a basic Medicare Part D plan that has a premium below the weighted average of Part 

D plan premiums in a region. This weighted average premium is determined each calendar year, 

and CMS announces plans that qualify. 

BACKGROUND 

BENEFICIARY ENROLLMENT AND THE LOW INCOME SUBSIDY PROGRAM

When shopping for a Part D prescription drug plan, Medicare 

beneficiaries can choose between two kinds of plans: 

1. Stand-alone prescription drug plans (PDPs) provide private drug coverage for Medicare beneficiaries with traditional 

fee-for-service Medicare coverage. 

2. Medicare Advantage-prescription drug plans (MA–PD) 

provide all the components of fee-for-service Medicare coverage 

and prescription drug coverage under one private plan. 

For the 2014 plan year, beneficiaries were able to choose from 

1,169 nationwide PDPs and 1,615 MA–PDs.12 Of the more than 35 

million Medicare beneficiaries who were enrolled in Medicare drug 

plans in 2014, about 64 percent were in PDPs and the rest were 

in MA–PD plans.13 Monthly premiums averaged about $30 across 

all plans.14

Approximately one-third of all enrollees (11 million) receive help 

through the Part D Low Income Subsidy (LIS) program to pay their 

drug plan premiums, copays, and deductibles.15 The Centers for 

Medicare and Medicaid Services (CMS) estimates that an additional two million low-income individuals are eligible for but are 

not receiving these subsidies. To qualify for the LIS, beneficiaries 

must meet an income and asset requirement; however, beneficiaries with very low incomes are automatically eligible.16 The 

amount of the subsidy (full or partial) is based on income level; 

beneficiaries below 100 percent of the federal poverty level receive 

a full subsidy, although a partial benefit is available for those 

beneficiaries between 100–150 percent of the federal poverty level. 

Beneficiaries who are dually eligible for Medicaid and Medicare 

automatically qualify for the LIS program without having to complete a separate application. If they do not choose a plan on their 

own, Medicare automatically enrolls these individuals into a qualified PDP.17 If the beneficiary qualifies for a full subsidy and enrolls 

in a qualified plan, the LIS subsidy covers the premium. They are, 

however, still responsible for small copayments for each covered 

medication, ranging from $1.15 to $6.60. 

GENERIC DISPENSING RATES

The generic dispensing rate has steadily increased in the Medicare Part D program, from 61 percent in 2007 to 81 percent in 


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18MedPAC, A Data Book: Health Care Spending and the Medicare Program, June 2014, p. 

173 (online at http://medpac.gov/documents/publications/jun14databookentirereport 

.pdf?sfvrsn=1). 19MedPAC, June 2014, supra at p. 174 20MedPAC, A Data Book: Health Care Spending and the Medicare Program, June 2014, p. 

383 (online at http://www.medpac.gov/documents/reports/mar14_ch14.pdf?sfvrsn=0). 21MedPAC, March 2013, supra at p. 354–362. 22MedPAC, Report to the Congress: Medicare Payment Policy, March 2012, p.354 (online at 

http://medpac.gov/documents/mar12_entirereport.pdf). 23Duru, O., et al., ‘‘Potential Savings Associated with Drug Substitution in Medicare Part D: 

The Translating Research into Action for Diabetes (TRIAD) Study.’’ Journal of General Internal 

Medicine: August 2013, p. 230. 

2012.18 One reason for this is that the introduction of the Part D 

benefit coincided with patent expirations for many of the most commonly prescribed drugs, making generic options available. Although the share of prescriptions for generic drugs has increased 

for both LIS and non-LIS beneficiaries from 2007 to 2011, as shown 

in the table below, LIS beneficiaries have had a consistently lower 

generic dispensing rate than non-LIS beneficiaries.19

TABLE 1: GENERIC DISPENSING RATE BY LIS STATUS, 2007–2011 20

2007 2008 2009 2010 2011 

LIS 60% 65% 68% 71% 74% 

Non-LIS 62% 69% 72% 76% 79% 

Even though generic utilization is high, overall numbers do not 

tell the whole story. MedPAC has cited the impact that high-cost 

beneficiaries—those enrollees whose spending reaches the catastrophic level—have on the overall spending of the program and 

the importance of generic substitution, where appropriate, in particular with this population. According to MedPAC’s Part D Status 

Report, over 80 percent of beneficiaries with high drug spending received Part D’s LIS.21

High-cost beneficiaries typically have more prescriptions filled 

and fewer generic substitutions than other beneficiaries. The 2012 

MedPAC review of this issue offers a telling statistic: in 2009, highcost beneficiaries filled an average of 111 prescriptions per year 

(about nine per month) at $110 per prescription, as compared with 

41 prescriptions per year (about four per month) at $42 per prescription for non-high cost beneficiaries.22 Although high-cost beneficiaries use many of the drugs commonly used by less-costly beneficiaries, they tend to use more brand-name drugs than other beneficiaries. 

While some differences reflect health status, there is support in 

the literature for notable differences within therapeutic classes. Researchers looking at potential savings from generic substitution in 

diabetes drugs alone found that generic substitutions resulted in 

annual savings of $127 to $160 per beneficiary, and concluded that 

examining enhancements of generic substitution, where appropriate, could be a practical next step to lowering drug costs in 

Medicare.23 Such savings are still relevant when considering, for 

example, recent MedPAC findings that among diabetic therapies, 

brand-name drugs accounted for 62 percent of the prescriptions for 

high cost enrollees, compared with just 33 percent of non-high-cost 

enrollees.24 The report discusses how plan formularies and other 


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24MedPAC, Report to the Congress: Medicare Payment Policy, March 2012, p.354 (online at 

http://medpac.gov/documents/mar12_entirereport.pdf). 25 CMS, Medicare Prescription Drug Benefit Manual (‘‘Medicare Prescription Drug Benefit 

Manual’’), (Pub-100–18), Part 6 § 30.1.5 (online at http://www.cms.gov/Medicare/PrescriptionDrug-Coverage/PrescriptionDrugCovContra/Downloads/Chapter6.pdf). 26 Appendix 2, OIG response to the Senate Special Committee on Aging. 27Gaps in Oversight of Conflicts of Interest, supra at p. 8 (‘‘CMS reviews and approves the 

formularies designed by P&T committees. CMS’s review focuses on ensuring that formularies 

provide access to a range of Part D drug choices. CMS checks the formularies to make sure they 

meet accepted pharmaceutical standards and include drugs from different therapeutic catfactors impact the generic dispensing rate among the LIS and nonLIS populations. 

PLAN FORMULARIES 

PLAN SPONSORS’ PRESCRIPTION DRUG COVERAGE DECISIONS

Plan formularies—the list of prescription drugs that are covered 

by a specific health care plan—are one of the most important considerations for Medicare beneficiaries in choosing a Part D plan. 

Federal law requires that plan sponsors use Pharmacy and Therapeutics (P&T) committees to make prescription drug coverage decisions. The committees are made up of physicians, pharmacists, 

nurses, administrators, quality-improvement managers, and other 

health care professionals and can vary in size; HHS OIG found 

that in 2010, committees ranged from 3 to 62 members, with an 

average size of 16 members. These committees evaluate drugs 

based on the scientific and economic considerations and aim to develop formularies that achieve appropriate and safe drug therapy. 

There is no statutory requirement that P&T committees consider 

or include generic drugs in their plan formularies; however, they 

are required to review practices and policies that affect access, including the availability of generic substitutions.25

Plan sponsors do not need to develop a different formulary for 

each of their plan offerings. In fact, OIG estimates there are about 

3,300 unique Part D drug plans, but there are roughly only 302 

CMS-approved Part D formularies.26 After a plan sponsor’s P&T 

committee chooses a formulary, it must obtain CMS’s approval before it can be implemented. In reviewing formularies, CMS works 

to ensure that beneficiaries have a range of Part D drug choices; 27

however, it does not explicitly review formularies for their inclusion 

(or exclusion) of generics.28

Plan sponsors incentivize beneficiaries to use generic drugs 

through how they have designed their plans, including copay and 

formulary structures. Medicare drug plans must meet defined requirements, but vary significantly in terms of premiums, benefit 

design, gap coverage, formularies, and utilization management 

rules. 

BENEFIT DESIGN

Plan sponsors have incentivized generic drug use with existing 

cost-sharing and formulary structures, as well as with utilization 

management programs. In 2014, about three-fourths of all plans 

(76 percent PDPs and 75 percent of MA–PD plans) used five costsharing tiers: preferred and non-preferred tiers for generic drugs, 

preferred and non-preferred tiers for brand drugs, and a tier for 


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29 Hoadley, J., Summer, L., Hargrave, E., Cubanski, J., & Neuman, T. Medicare Part D in 

Its Ninth Year: The 2014 Marketplace and Key Trends, 2006–2014. August 18, 2014. 30 Id. 31 Hoadley J., Cubanski, J., Hargrave, E., & Summer, L. Medicare Part D: A First Look at 

Plan Offerings in 2015. October 10, 2014. 32 id. 33 id. 34Prime Therapeutic’s estimated savings is particularly relevant because unlike many pharmacy benefit managers, the company is collectively owned by thirteen not-for-profit Blue Cross 

and Blue Shield Plans and can assess drug spending holistically on an ongoing basis as part 

of a beneficiary’s overall health status. 35MedPAC, March 2013. 

specialty drugs.29 About 62 percent of Part D enrollees are in PDP 

plans, and the remaining 38 percent are in MA–PD plans, with 

considerable variation across states.30 For the first time in the 

coming plan year, all stand-alone prescription drug plans will use 

tiered cost sharing.31 The use of tiering is significant. The tier-pricing plan design incentivizes beneficiaries to use lower-cost generic 

options, which helps to offset rising brand-name specialty drugs’ 

costs (and thus overall plan costs) and keep premium growth low. 

However with most plans charging coinsurance, rather than a flat 

copayment amount for the highest cost drugs, this growing trend 

also raises concerns about beneficiary access to the highest cost or 

sole source drugs, where generic options may not be available. 

In addition to tiering, PDPs have applied ‘‘utilization management’’ restrictions since 2007 to an increasing share of on-formulary brand-name drugs. MA–PDs apply similar techniques, but 

generally to a smaller share of drugs. This means that even if a 

drug is listed on a plan’s formulary, utilization management rules 

may be required—including step therapy, prior authorization and 

quantity limits. The presence of such rules increased from 18 percent of drugs in 2007 to 35 percent in 2013, the latest year for 

which such data is available. 32 In 2013, across all PDPs, on average: 

• One percent required step therapy (requiring the beneficiary 

to use a comparable, less costly alternative first); 

• 18 percent of drugs had quantity limits (for example, limiting a prescription to 30 pills for 30 days); and 

• 21 percent required prior authorization.33

Plan sponsors are likely to use tiering and utilization strategies 

in tandem to incentivize beneficiaries to use generic drugs and to 

control overall costs. For example, Prime Therapeutics, a benefit 

pharmacy manager, found that for every 1 percent increase in generic dispensing rates, a 1.5 percent—or more—average savings on 

drug spending can be expected without impacting care and in many 

cases improving overall health status through adherence.34

Differences with LIS recipients 

Although plan sponsors have been successful in structuring plans 

that incentivize generic drug use among the general population, 

they cannot use the same strategy of tiered-benefit structures to 

provide similar cost-incentives for the LIS population. For about 80 

percent all LIS beneficiaries, drug copays are nominal, and for a 

smaller number of LIS beneficiaries, their copays are roughly 15 

percent of the drug cost.35 As shown in Table 2, LIS beneficiaries 

have a collapsed tiering structure, meaning they are responsible for 

copay amounts set by statute. 


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36 In 2014, the federal poverty level for a household of 1 person is equal to $11,670. (online 

at http://aspe.hhs.gov/poverty/14poverty.cfm). 37 Appendix 2, OIG response to the Special Committee on Aging. 38MedPAC, March 2012, supra at p. 353. 39 id at p. 355. 40 Bipartisan Policy Center: A Bipartisan Rx for Patient-Centered Care and System-wide Cost 

Containment. April, 2013, p. 64. 41Office of Management and Budget. Budget of the U.S. Government, 2014, p. 39–40, 100. (online at http://www.whitehouse.gov/sites/default/files/omb/budget/fy2014/assets/budget.pdf). 42 id. 43 Hoadley, J. F., Merrell, K., Hargrave, E., & Summer, L., In Medicare Part D Plans, Low 

Or Zero Copays And Other Features To Encourage The Use Of Generic Statins Work, Could Save 

Billions, supra. 

TABLE 2: COPAY AMOUNTS FOR LIS BENEFICIARIES DURING 2013 FOR GENERIC AND BRANDNAME DRUGS 36

Generic & Multisource 

Preferred Drugs 

Non-Preferred Brand 

Name 

LIS beneficiaries at or below 100 percent of the Federal Poverty 

guidelines ...................................................................................... $1.15 $3.50 

LIS beneficiaries over 100 percent of the Federal Poverty guidelines ............................................................................................... $2.65 $6.60 

Medicare sets fixed limits on the copay amounts for LIS beneficiaries and pays the plan sponsor for the difference between the 

copay amount and the cost under the plan. Lower copays have been 

cited as one possible explanation as to why there is higher usage 

of brand-name drugs (and lower generic dispensing rates) in the 

LIS population.37

The LIS population continues to be the largest single share of 

Part D costs.38 The lack of flexibility that plan sponsors have in 

benefit design for LIS beneficiaries has been a focus in recent years 

as policymakers have continued to look for avenues to keep overall 

spending low. MedPAC,39 the Bipartisan Policy Center,40 and the 

President’s most recent budget 41 have suggested that lowering or 

eliminating copays for generic drugs for LIS beneficiaries has the 

potential to reduce program spending in the future without substantially affecting access to needed medications. Researchers estimated savings of roughly $1 billion annually per 10 percent increase in the use of generic statins.42 In one study, researchers 

found that a low copayment for generic drugs was the strongest 

factor influencing the use of these drugs, and eliminating the copay 

has an especially large effect.43

The Committee heard concerns that increasing copays for LIS 

beneficiaries for brand-name drugs might affect access for this particularly vulnerable population. Many of these beneficiaries’ health 

statuses are such that if a beneficiary is on multiple drugs in any 

month, the costs could add up to be burdensome. Furthermore, generic substitutions may not be universally effective in all situations, depending on the complexity of the beneficiary’s health conditions. 

In the event that copays are changed, LIS beneficiaries are permitted to file an appeal with their plan when a brand-name prescription is needed. However, the appeals system is extremely complex, time-consuming, and in its current state, could make it very 

challenging for beneficiaries to obtain access to needed drugs. 

MedPAC stated in its recent review of the Part D appeals process, 

‘‘The data that were available to us were insufficient to make a 

comprehensive assessment of the plans’’ administration of the procVerDate Sep 11 2014 00:28 Jan 14, 2015 Jkt 049010 PO 00000 Frm 00015 Fmt 6659 Sfmt 6602 E:\HR\OC\SR306.XXX SR306

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44MedPAC, March 2014, supra at p. 368. 45Sokolovsky, J., Suzuki, S. & Metayer, L., ‘‘Part D Exceptions and Appeals,’’ (Presentation 

to MedPAC: September 2013, available at http://www.medpac.gov/transcripts/ 

part%20d%20exceptions%20&%20appeals.pdf). 46 Excludes cases that were dismissed, withdrawn or remanded and cases involving non-Part 

D drugs, see: Centers for Medicare and Medicaid Services, ‘‘Part D Fact Sheets CY 2011’’ (available at http://www.cms.gov/Medicare/Appeals-and-Grievances/MedPrescriptDrugApplGriev/ 

Reconsiderations.html). 47 Hoadley, J., Summer, L., Hargrave, E. & Cubanski, J., December 11, 2013, supra. 48For the Committee’s request, see Appendix 1. For HHS OIG’s response, see Appendix 2. 

ess . . . and suggest the need for greater transparency and streamlining.’’ 44

What limited information is available on Part D exceptions and 

appeals is not reassuring. The agency’s 2012 audit suggests that 

Part D plans struggle most with managing coverage determinations, appeals, and grievances.45 Additionally, 2011 data released 

by CMS finds that over half (54 percent) of plan-level denials are 

overturned by the Independent Review Entity (IRE).46 This rate of 

reversals by the IRE, coupled with the agency’s own audit data on 

plans, raises serious questions about how well the redetermination 

and appeals process is working. Finally, beneficiary notification of 

non-coverage is a significant problem particularly for enrollees who 

are dually eligible for both Medicaid and Medicare, the majority of 

the LIS population. 

Complicating the appeals process further, the Part D marketplace for LIS enrollees has been inconsistent, with only 15 plans 

qualifying as benchmark plans in every year from 2006 to the 

present.47 This means that this population, for the most part, is 

subject to continual auto-reassignment to new plans. This volatility 

would need to be taken into account with any co-pay increases or 

implementation of utilization management tools, like prior authorization; vulnerable beneficiaries subjected to constant re-review, 

without a streamlined and integrated process in place perhaps even 

between plans, could easily result in delays for needed medications. 

GENERIC DRUGS ARE AVAILABLE IN PLAN FORMULARIES

At the Committee’s request, HHS OIG reviewed all 2013 Part D 

plans to determine the availability of generic drugs in plan 

formularies.48 Because the generic dispensing rate for the LIS population is lower than it is for the non-LIS population, the HHS OIG 

review was conducted to determine the availability of generic drugs 

in plan formularies to provide a baseline for our review. HHS OIG 

found that generic drugs are widely available throughout all Part 

D plans, including benchmark plans that the LIS population commonly uses. A benchmark plan is a plan that is at or below the 

amount that the federal government’s low-income subsidy will pay 

for a Part D plan premium. 

In fact, the HHS OIG review found that Part D benchmark plans 

have a higher percentage of generic drugs available than plans 

above the regional benchmarks. This is significant because unless 

a beneficiary opts out, CMS automatically enrolls LIS beneficiaries 

in a benchmark plan. If an LIS beneficiary chooses a non-benchmark plan, he or she is responsible for the difference in premiums. 

Consequently, benchmark plans serve a higher proportion of LIS 

beneficiaries; according to the HHS OIG’s review, 69 percent of all 

LIS beneficiaries are in a benchmark plan. 


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The average percentage of generic drugs included in benchmark 

plans was 61 percent, compared to 58 percent for plans above the 

benchmark. Therefore, the lower generic dispensing rate among the 

LIS-population is not due to unavailability of generic drugs. Thus, 

to explain the difference in generic dispensing rates, other factors 

may explain why generic drug use by LIS beneficiaries has been 

lower than non-LIS beneficiaries, such as beneficiary copays and 

preferences, the prescribing behavior of health care providers, and 

pharmacy dispensing practices. These factors are discussed later in 

this report. 

HHS OIG also reviewed formularies for generic substitution potential. Generic substitution potential measures the ability within 

a formulary to substitute a brand-name drug for a generic drug. 

The HHS OIG review found that the potential for generic-drug substitution was the same or higher in benchmark plans than in plans 

above the regional benchmark. The average generic-substitution 

potential for benchmark plans was 87 percent, compared to 83 percent for the other plans. 

As with larger MedPAC drug utilization trends among enrollees, 

a review of seventeen specific randomly picked drugs that had 

much lower generic dispensing rates for LIS beneficiaries than for 

non-LIS beneficiaries provides needed context to these findings. For 

the seventeen drugs reviewed by the HHS OIG for which LIS beneficiaries had substantially lower rates of generic substitution, most, 

but not all, of the formularies covered generic equivalents for the 

drugs reviewed. Out of the seventeen drugs reviewed, seven of the 

drugs did not universally have a generic equivalent available on all 

Part D formularies. The number of formularies that covered only 

a brand-name of one or more of the seven drugs was very small, 

ranging between one and eight formularies, depending on the drug 

at issue. Of those formularies that did not include a generic alternative for one or more of the seven drugs, most served Part D 

plans with premiums both above and below the regional benchmark. 

Therefore, while formularies overwhelmingly support maximum 

use of generics, in certain cases, the OIG review did show that a 

generic alternative was available on the market, but not on the formulary. Evidence appears to show that such cases are in the minority, but it remains unclear from the OIG’s data as to where such 

formularies operate, what the beneficiary enrollment characteristics are, or any other enrollment specifics. It is also unclear where 

the brand name drug is placed (what tier) on the formularies without a generic option, or whether drugs with high brand name utilization were connected to cases of where there may be potential conflicts of interest between pharmaceutical companies and P&T committees, as found in another HHS OIG review and discussed later 

in this report. Even though the formularies without a generic alternative for highly prescribed drugs are very small, such questions 

offer potential additional areas worth exploring. 

PHARMACY & THERAPEUTICS COMMITTEES MAY NOT BE FREE OF

CONFLICTS OF INTEREST

One federal requirement is that at least two members on each 

P&T committee must be free of conflicts of interest from the sponVerDate Sep 11 2014 00:28 Jan 14, 2015 Jkt 049010 PO 00000 Frm 00017 Fmt 6659 Sfmt 6602 E:\HR\OC\SR306.XXX SR306

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49Medicare Prescription Drug Benefit Manual, supra at Part 6 § 30.1.1. 50 HHS OIG, Gaps in Oversight of Conflicts of Interest, supra at p. 13. 51 HHS OIG, Gaps in Oversight of Conflicts of Interest, supra at p. 15. 52OIG, Gaps in Oversight of Conflicts of Interest, supra at p. 16. 53OIG, Gaps in Oversight of Conflicts of Interest, supra at p. 19. 54OIG, Gaps in Oversight of Conflicts of Interest, supra at p. 21. 55Department of Health and Human Services, Centers for Medicare and Medicaid Services. 

Medicare Program; Contract Year 2015 Policy and Technical Changes to the Medicare Advantage and the Medicare Prescription Drug Benefit Programs. January 10, 2014, supra. 

sor or pharmaceutical companies.49 This requirement is designed to 

ensure that committees make independent and sound decisions 

about which drugs should be covered by sponsors and under what 

conditions. However, a report issued by HHS OIG in March 2013 

found that sponsors conduct little oversight of potential conflicts of 

interest. HHS OIG reported that: 

• Most sponsors’ P&T committees have limited definitions of 

conflicts of interest, which could prevent them from identifying 

conflicts.50

• Many P&T committees allow their members to determine 

their own conflicts, potentially enabling conflicted members to 

join and remain on P&T committees.51

• CMS does not adequately oversee sponsors’ compliance 

with the requirement that at least two members on each P&T 

committee be independent and free of conflict relative to the 

sponsor and pharmaceutical manufacturers.52

HHS OIG recommended that CMS establish minimum standards 

requiring sponsors to ensure that an objective process is used to determine whether disclosed financial interests are conflicts, instead 

of continuing to allow P&T members to review their own conflicts.53 To ensure that formulary decisions are based only on scientific evidence and standards of practice, HHS OIG also recommended that CMS oversee conflict-of-interest procedures implemented by plan sponsors.54

CMS proposed a rule in early 2014 containing a provision that 

would require P&T committees to clearly articulate and document 

processes used to determine that conflict-of-interest requirements 

have been met. The rule would require an objective party to determine whether disclosed financial interests are conflicts and to manage recusals resulting from such conflicts.55 However, this provision was not adopted in the final rule. 

Another potential area for exploration stakeholders suggested 

was to request that CMS review whether P&T committees met 

their obligation to keep written records of all formulary decisions, 

including any decision to exclude from their formularies any available, chemically equivalent generic drugs for the most common illnesses or commonly used brand-name drugs. 

DRUG MANUFACTURERS’ REBATES ARE HIGHER FOR LIS BENEFICIARIES

The impact of collapsed tiering seems to manifest through formulary share rebates received by sponsors. Plan sponsors typically 

receive two kinds of rebates from drug manufacturers that may adversely affect generic dispensing rates—formulary rebates and 

market-share rebates. Sponsors receive formulary rebates when 

they structure formularies in ways that either encourages beneficiaries to use certain drugs or discourage the use of competitors’ 


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56Department of Health and Human Services, Office of the Inspector General. OIG Concerns 

with Rebates 2011. (Report # OEI–02–08–00050), March 2011, p. 15. 57 id. 58 id. 59 Committee Staff Conference Call with CMS, Sept. 5, 2013. 60 id. 

drugs.56 Market-share rebates are based on the number of drugs 

sold to the sponsors’ beneficiaries. 

HHS OIG released a study in which five of the six sponsors 

interviewed received higher formulary-based rebates for LIS beneficiaries than non-LIS beneficiaries.57 For example, one plan sponsor received a 20 percent rebate for drugs dispensed to LIS beneficiaries compared to a 10 percent rebate for the same drugs dispensed to non-LIS beneficiaries.58 This difference may give plan 

sponsors greater incentive to have LIS beneficiaries use brandname drugs compared to non-LIS beneficiaries on the same plan.59

One reason why drug manufacturers may be providing higher rebates for drugs dispensed to the LIS population is because LIS 

beneficiaries have lower copay requirements than non-LIS beneficiaries—and therefore do not have the same cost incentives to select generic drugs. CMS told us that although they obtain reports 

at the National Drug Code (NDC) level (the unique identifier code 

for drugs) there is no way for them to tell whether a rebate was 

tied to the purchase of a drug by an LIS or non-LIS beneficiary.60

It is unclear how rebate practices would be impacted by changes 

to LIS-beneficiary copay changes. 

OTHER FACTORS 

Apart from plan formularies, there are a variety of other factors 

that can impact the use of generic drugs, including: 

• The design of CMS’s Plan Finder; 

• Beneficiary education and perceptions about generics, and 

• Physician Prescribing and Pharmacy Billing Practices 

This section describes these factors and possible approaches that 

should be considered to further increase generic dispensing rates. 

CMS PLAN FINDER DESIGN

To help beneficiaries compare Part D plans and identify plans 

that meet their needs, CMS developed the Medicare Plan Finder 

interactive website. Plan Finder allows beneficiaries to submit information on the drugs they take in order to compare plans and estimate annual and monthly out-of-pocket expenses. Enabling beneficiaries to compare and shop for private prescription drug plans 

through a web-based marketplace increases competition among the 

plan sponsors. Beneficiaries can look for plans that offer the coverage they need for their prescriptions at the best prices using the 

premium and copay amounts quoted on Plan Finder. 

The Committee received several comments related to the importance of evolving the Plan Finder tool in the future to incorporate 

generics education directly to Medicare beneficiaries. Some insurance plans have had significant success in the past using online 

tools to educate consumers about the safety and cost-effectiveness 

of generic drugs. For instance, in a Senate Special Committee on 


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61 ‘‘The Generic Drug Maze: Speeding Access to Affordable Life-Saving Drugs.’’ Senate Special 

Committee on Aging, July 20, 2006. (online at http://www.gpo.gov/fdsys/pkg/CHRG109shrg30710/html/CHRG-109shrg30710.htm). Accessed December 11, 2013. 62MedPAC, March 2012, supra at p. 360. 

Aging hearing at the start of the Part D program,61 a witness from 

Blue Cross Blue Shield Michigan (Blue Cross) outlined their efforts 

to educate its 183,000 Part D beneficiaries about the benefits of 

using generics. Blue Cross developed the ‘‘Unadvertised Brand 

Campaign’’ to provide beneficiaries with useful information about 

generic medications as an alternative to brand-name medications. 

Essentially, in Blue Cross’s campaign, the beneficiary selected a 

brand-name drug from a drop-down menu of options and entered 

the number of pills taken per day. The beneficiary then selected an 

icon, ‘‘Calculate my savings now,’’ and the computer would generate a table with the drug brand and generic names, along with 

the cost of a single pill and a 30-day supply. A box within the table 

entitled, ‘‘You could save,’’ clearly depicts the amount of money a 

beneficiary could save simply by switching to a generic alternative. 

After the introduction of the ‘‘Unadvertised Brand Campaign,’’ Blue 

Cross noted an increase in the generic dispensing rate from 37.7 

percent to 52 percent. 

Other patient-education methods included advertisements that 

portrayed generics as safe, affordable, and equivalent in effectiveness and potency to brand-name medications. These advertisements were placed in newspapers, business journals, and other 

publications. A survey conducted after Blue Cross began the 

‘‘Unadvertised Brand Campaign,’’ indicated a six percent increase 

in positive attitudes about generics being equivalent to brand-name 

medications. 

Even though the Blue Cross campaign was undertaken several 

years ago, the technology they used was more sophisticated than 

what Medicare Plan Finder uses today. CMS could consider incorporating some of the tools that plan sponsors have successfully 

used into the Plan Finder website to further encourage the use of 

generic drugs. 

For instance, the Plan Finder tool allows beneficiaries to search 

for a generic or a brand-name drug, but not at the same time. Although Plan Finder does offer a message telling a beneficiary that 

a lower-cost option is available when a brand-name drug is selected, the beneficiary must take an additional step to select the generic drug. Plan Finder will—through a series of confusing steps— 

show a comparison between brand and generic copays, but it 

misses an opportunity to automatically show the consumer the potential cost difference between a brand and generic version of a 

drug, as in the Blue Cross campaign. 

Medicare Plan Finder Star Ratings 

As the Medicare Plan Finder has evolved, CMS has incorporated 

quality ‘‘Star Ratings’’ on each plan, which measures the plan sponsors’ performance in four broad areas: customer service, member 

complaints, beneficiary experience, and drug pricing and patient 

safety.62 Plan rating measures have evolved to put more emphasis 

on appropriate medication use and adherence. For instance, in 

2012, measures were added to assess beneficiary adherence to 

medication therapy for diabetes, hypertension, and cholesterol. The 


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63Government Accountability Office, Report to the Special Committee on Aging, Medicare Part 

D: CMS has Implemented Processes to Oversee Plan Finder Pricing Accuracy and Improve 

Website Usability, January 10, 2014. 64 Campbell, E. G., Genevieve, P., Vogeli, C. & Iezzoni, L., ‘‘Physician Acquiescence to Patient 

Demands for Brand-Name Drugs: Results of a National Survey of Physicians,’’ Journal of the 

American Medical Association. Vol. 173, No. 3. 11 February 2013. 65Shrank, W. H., et al., ‘‘Patients’’ Perceptions of Generic Medications,’’ supra. 66 id. 

Star Ratings performance data has served as a valuable consumer 

transparency tool.63

Although plan sponsors are required to report data about generic 

dispensing rates to CMS, the Star Ratings do not include this information. A consumer looking at the Star Ratings can see the overall 

rating, but would not know how that rating was derived. For example, a consumer would not know about generic dispensing rates or 

the availability of consumer-education activities that provide information about lower-cost drug options. Express Scripts, a pharmacy 

benefit manager serving approximately 7.5 million Medicare Part 

D beneficiaries, told us that the lack of focus on generic drugs in 

quality ratings is a missed opportunity. We had several conversations with CMS about incorporating value-based consumer education or generic dispensing rates into the Star Ratings and note 

the potential complexities involved; however, developing such a 

measure could be an important step in encouraging lower-cost prescription drug use among seniors. 

BENEFICIARY EDUCATION

Education matters: Assessment of attitudes about generics among 

seniors 

Even though many older patients have embraced generics as a 

part of their standard treatment regimens, some seniors still have 

negative attitudes about the use of generic drugs. Despite the Food 

and Drug Administration’s (FDA) assurances of the safety of generic drugs, some consumers still have negative perceptions about 

them. 

A number of studies have identified that patient preference for 

branded drugs may influence physician prescribing practices. For 

example, a study published in the Journal of the American Medical 

Association (JAMA) surveying 3,500 physicians in seven specialties, 

found that approximately four of 10 physicians report that they 

sometimes or often prescribe a brand-name drug to a patient when 

a generic is available because the patient wanted it.64

In a 2009 Health Affairs study, 2,500 patients were surveyed 

about their opinions on generic drugs.65 Overall, survey participants believed that significant savings could be achieved through 

the use of generics instead of brand-name medications; however, 

the majority still preferred brand-name drugs. Less than half of 

those surveyed said that they would agree to take a generic medication and 42 percent did not believe that generics were safer than 

brand-name medications. Researchers cited several possibilities as 

to why these perceptions exist, including: 66

• Associating the word ‘‘generic’’ with something that is diminished in worth or value, or ‘‘not as good’’ as brand-name drugs. 

These patients believed that because a drug costs more, it must be 

more effective than a lower-cost generic. 


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67 Ha ̊konsen, H., & Toverud, E.L. ‘‘A Review of Patient Perspectives on Generics Substitution: 

What Are the Challenges for Optimal Drug Use,’’ supra. 68Shrank, W. H., et al., ‘‘Patients’’ Perceptions of Generic Medications,’’ supra. 69 Joyce, G. F., Keller, E. B., Shang, B. & Goldman, D. P., ‘‘The Lifetime Burden of Chronic 

Disease Among the Elderly,’’ Health Affairs, September 26, 2005; See ‘‘Future Health and Medical Care Spending for the Elderly: Implications for Medicare.’’ Rand Health Research Highlights. Report RB–9146–1–CMS (2005) (online at http://www.rand.org/content/dam/rand/ 

pubs/research_briefs/2005/RAND_RB9146-1.pdf.). 70 Caldwell, D. J., Jaubert, K., Zagar, M., & Sherman, J., ‘‘Considerations for Generic Drug 

Use in the Elderly,’’ Pharmacy Times, January 1, 2007 (online at http:// 

www.pharmacytimes.com/publications/issue/2007/2007-01/2007-01-6215). Accessed November 

21, 2013; Iosifescu, A., et al., ‘‘Beliefs about Generic Drugs Among Elderly Adults in HospitalBased Primary Care Practices,’’ supra. 71Zagaria, M. A. E., ‘‘Generic Medications: Issues in Senior Care Pharmacy,’’ US Pharmacist. 

June 19, 2007 (online at http://www.uspharmacist.com/content/c/10308/?t=men’s_health). 

• Inadequate communication about the benefits of generics between patients and providers. 

• Unease regarding substitution of a generic for a brand-name 

medication at the pharmacy. 

In another study, researchers conducted a literature review regarding the use of generics as substitutes for brand-name medications. They reviewed 20 scientific papers published from 2000 to 

2011 that examined the attitudes of patients in the United States 

and several other Western countries and found a number of factors 

impact the perception of generic drugs, including: 67

• Whether the patient has a serious or chronic condition, as 

not all brand-name drugs for these conditions have equivalent 

or clinically-appropriate generic substitutes; 

• The involvement of the health care provider in counseling 

the patient and in prescribing generic drugs; 

• The patient’s education and health literacy; 

• The name recognition of the brand-name drug; 

• The physical appearance (shape, size, and color) of the generic drug. Some patients expressed confusion about dosage 

due to the altered appearance of the generic drug; and 

• The taste of the generic drug. 

The barriers identified in these scientific studies are applicable 

to older patients, too.68 Older patients, as a whole, are more chronically ill, have higher health care expenditures, and consume medications at much higher rates than younger patients.69 Although 

there are exceptions, generally, older patients are more resistant to 

using generic medications than any other patient demographic.70

Thus, addressing these concerns about generics is even more important with seniors. 

To dispel myths about generics, the FDA and plan sponsors have 

used a number of different strategies to educate consumers, including Internet promotions, pamphlets, brochures, and flyers. Even 

though educating seniors about their health care options may be 

challenging, it is important, as patients who are more informed 

about their treatment generally have better outcomes. Seniors 

should be encouraged to inquire about their medications and 

should be educated about the right questions to ask. In turn, 

health care providers should explain why a generic medication is 

being prescribed in a way that the patient can easily understand. 

Through better education and communication, myths about generic 

drugs can be dispelled, and better health outcomes can be 

achieved.71


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72 National Association of Chain Drug Stores. Testimony to the Senate Special Committee on 

Aging: 10 Years Later: A look at the Medicare Prescription Drug Program. May 22, 2013. 73Marrufo, G. et al., ‘‘Medication Therapy Management in a Chronically Ill Population: Interim Report.’’ Prepared for Steven A. Blackwell, Centers for Medicare & Medicaid Services 

(CMS), Center for Medicare & Medicaid Innovation, Acumen, LLC, p. 1. January 2013 (online 

at http://innovation.cms.gov/Files/reports/MTM-Interim-Report-01-2013.pdf). Retrieved March 

5, 2014. 74 ‘‘Medication Adherence in America: a National Report, 2013.’’ National Report Card on Adherence, p. 2. National Community Pharmacists Association (online at http://www.ncpanet. org/ 

pdf/reportcard/AdherenceReportCard_Abridged.pdf). Retrieved March 5, 2014. 75Martin, L. R., Williams, S.L., Haskard, K. B. & DiMatteo, M. R., ‘‘The Challenge of Patient 

Adherence,’’ Therapeutics and Clinical Risk Management. 1(3) 189–199. 2005, (online at http:// 

www.ncbi.nlm.nih. gov/pmc/articles/PMC1661624/pdf/tcrm0103-189.pdf). Retrieved March 5, 

2014. 76Latif, S. & McNicoll, L., ‘‘Medication and Non-Adherence in the Older Adult,’’ Geriatrics for 

the Practicing Physician. Volume 92, No. 12. December 2009 (online at http://rimed.org/ 

medhealthri/2009-12/2009-12-418.pdf). Retrieved March 5, 2014. 77Marrufo, G. et al., supra. 78 ‘‘APhA MTM Central: What is Medication Therapy Management.’’ American Pharmacists 

Association, 2014 (online at http://www.pharmacist.com/mtm). 

Medication therapy management 

Educating seniors about the importance of adhering to their 

medication regimen could also play an important role in reducing 

overall health care costs. CBO recently reported the savings that 

could be realized if patients adhere to their medication therapies 

and found that for each one percent increase in the number of prescriptions filled by beneficiaries, there is a corresponding decrease 

in overall Medicare medical spending. When projected to the entire 

population, this translates into a savings of $1.7 billion in overall 

health care costs for every one percent increase in the number of 

prescriptions filled.72

Medication adherence in older patients can be problematic. Several studies suggest that medication non-adherence contributes to 

a substantial human and financial toll in the United States, with 

33 percent to 69 percent of all medication-related hospital admissions due to non-adherence.73 According to industry analysts, the cost of medication non-adherence exceeded $290 billion in 2009.74

Typical reasons older patients may not comply with prescribed 

medication include: • cost and affordability; • cognitive decline; • convenience, including how many times per day the medication must be taken and the difficulty of the treatment regimen; 75

• risks, including the tradeoff between benefits and possible 

side effects; • communication problems between the patient and the 

health care provider; and • patients not agreeing with the treatment regimen.76

Interventions such as medication therapy management (MTM) 

programs have been found to lower health care costs by preventing 

adverse outcomes that lead to hospital admissions.77 MTM is a 

service or group of services that optimize therapeutic outcomes for 

individual patients.78 In Medicare Part D, MTM programs must 

generally include: • prescriber interventions to promote coordinated care; • an interactive comprehensive medication review and discussion with the beneficiary; • a written summary (in CMS’s standardized format) of the 

prescriber recommendations; and 


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79Shapiro, J. R., ‘‘CY 2015 Medication Therapy Management Program Guidance and Submission Instructions,’’ May 7, 2014 (online at http://www.cms.gov/Medicare/Prescription-Drug 

Coverage/PrescriptionDrugCovContra/Downloads/ 

MemoContractYear2015MedicationTherapyManagementProgramSubmission050714.pdf). 80 Perlroth, D. et al., ‘‘Medication Therapy Management in Chronically Ill Populations: Final 

Report.’’ Prepared for Steven A. Blackwell, Centers for Medicare & Medicaid Services (CMS), 

Center for Medicare & Medicaid Innovation, Acumen, LLC, August 2013 (online at http://innovation.cms.gov/Files/reports/MTM_Final_Report.pdf.). 81 Rucker, N. L., ‘‘Medicare Part D’s Medication Therapy Management: Shifting from Neutral 

to Drive.’’ AARP Public Policy Institute, June 2012 (online at http://www.aarp.org/content/ 

dam/aarp/research/public_policy_institute/health/medicare-part-d-shifting-from-neutral-todrive-insight-AARP-ppi-health.pdf). 82 National Association of Chain Drug Stores. Testimony to the Senate Special Committee on 

Aging, May 22, 2013, supra. 

• frequent monitoring and follow-up of the beneficiary’s 

medication therapies.79

However, plan sponsors vary greatly in how they satisfy these 

service elements. A recent study conducted in conjunction with the 

CMS Center for Medicare and Medicaid Innovation found that in 

2010, all 678 active Part D contracts with an approved MTM program reported offering annual comprehensive and targeted medication management to their enrollees. However, these programs differed in the ways in which they offered these interventions: for example, 81.1 percent of these programs presented enrollees with a 

list of medication therapy recommendations, while 29.4 percent 

provided enrollees with a reconciled medication list.80

There are several demonstrated savings from MTM programs 

when implemented effectively and targeted to the right patients. 

For example: 

• In 2009, Connecticut conducted an MTM study, where 

pharmacists met with 88 Medicaid patients who averaged 9 to 

10 medical conditions and used an average of 15 medications. 

Within 10 months, pharmacists had identified more than 900 

drug therapy problems, 80 percent of which they resolved in 

four visits. Estimated annual savings were $1,123 per patient 

on medication costs, and $472 per patient on medical and hospital costs. 

• In Minnesota, a 10-year evaluation of MTM provided to integrated health system patients estimated a return on investment of $1.29 for every $1.00 spent in MTM costs.81

• Within Medicare, CMS reported that Medicare Part D 

beneficiaries with congestive heart failure and chronic obstructive pulmonary disease (COPD) who were newly enrolled in the 

Part D MTM program experienced increased medication adherence and discontinuation of high-risk medications. The report 

also found that monthly prescription drug costs for these beneficiaries decreased by approximately $4 to $6 per month and 

that they had nearly $400 to $500 lower overall hospitalization 

costs than those who did not participate in the Part D MTM 

program.82

• In another review, researchers analyzed a large random 

sample of Part D enrollees with diabetes, heart failure, and 

COPD, to see whether poor adherence to recommended drugs 

was associated with higher Medicare costs. Researchers found 

that beneficiaries with poor adherence had higher costs, ranging from $49 to $840 per month for patients with diabetes for 


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83Stuart, B. S., Loh, F. E., Roberto, P. & Miller, L. M., ‘‘Increasing Medicare Part D Enrollment In Medication Therapy Management Could Improve Health And Lower Costs.’’ Health Affairs. July 2013: Vol. 32, No. 7. p. 1212–1220. 84Department of Health and Human Services, Centers for Medicare and Medicaid Services. 

Medicare Program; Contract Year 2015 Policy and Technical Changes to the Medicare Advantage and the Medicare Prescription Drug Benefit Programs. Proposed guidance RIN 0938–AR37, 

January 10, 2014. 85Medicare Program, Contract Year 2015 Policy and Technical Changes to the Medicare Advantage and Medicare Prescription Drug Benefit Program. CMS–4159–P (online at http:// 

www.gpo.gov/fdsys/pkg/FR-2014-01-10/pdf/2013-31497.pdf). 86Medicare Program, Contract Year 2015 Policy and Technical Changes to the Medicare Advantage and Medicare Prescription Drug Benefit Program, supra. 87 id at p. 1948. 

example.83 However, importantly, such beneficiaries were not 

uniformly more likely than others to be eligible for MTM services. 

All prescription drug plans in Medicare Part D are required to 

offer MTM services to patients with high annual drug spending 

($3,100 or more in 2012), who have at least two chronic conditions, 

and who are taking two to eight different Part D drugs. Some plans 

offer MTM services to all beneficiaries, but most offer them to less 

than 10 percent of their beneficiaries. Despite conservative estimates that at least 25 percent of beneficiaries are eligible for MTM 

services, CMS cited participation rates of less than eight percent in 

2011.84

Having a dollar threshold for MTM intervention may perversely 

incentivize brand-name drugs. Not only can a beneficiary take multiple generic drugs and not reach the $3,100 target threshold, but 

if a physician or pharmacist determines appropriate generic substitutions can be made, a beneficiary could lose his eligibility for 

MTM services by falling below the dollar threshold. 

CMS proposed changes to improve participation in a draft regulation release in January, including incorporating MTM eligibility 

and program features into the ‘‘Medicare Plan Finder’’ website and 

in the annual Medicare and You handbook mailed to all beneficiaries.85 The agency acknowledged the perverse incentive created 

by the dollar threshold, stating: 86

We are concerned with such variability, especially in 

cases where a beneficiary meets the minimum number of 

chronic diseases for eligibility, but may not qualify for 

MTM because his or her chronic condition is not targeted 

by the plan, he or she doesn’t take enough medications for 

the plan’s program (even though medication management 

issues are present), or because high utilization of lower 

cost generics places prescription drug costs for the beneficiary below the cost threshold.87

Accordingly, the proposed rule would have lowered the annual 

total drug cost threshold to $620 (the estimated cost of two generic 

prescriptions) and revised the interpretation of ‘‘multiple Part D 

drugs’’ to mean two or more drugs and two or more chronic conditions. However, this provision was not finalized in CMS’s final 

version of the rule. 

Given MTM’s potential to improve outcomes and lower costs, it 

is important that it reaches the full range of beneficiaries who 

would benefit from active medication management. Expanding eligibility criteria is one step, but CMS should also focus efforts to improve enrollment. For instance, developing outcomes-oriented 


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88See Appendix 2. 89See Department of Health and Human Services, Office of the Inspector General, Medicare 

Inappropriately Paid for Drugs Ordered by Individuals Without Prescribing Authority, June 

2013 (online at https://oig.hhs.gov/oei/reports/oei-02-09-00608.pdf). 

metrics—such as a ratio for overall rate of participation as compared with total eligible beneficiaries—could help to ensure that 

the focus is on employing MTM services more broadly. 

PHYSICIAN PRESCRIBING AND PHARMACY BILLING PRACTICES

The Committee found that physician prescribing and pharmacy 

billing practices can also play a significant role in realizing the full 

potential of savings from lower-cost drugs. In addition to educating 

physicians about generics and examining industry relationships to 

identify conflicts of interest, questionable pharmacy billing practices should also be addressed. HHS OIG stated, in response to the 

Committee (see Appendix 2): 

Health care providers and pharmacies influence the use 

of generic drugs. For example, generic substitution cannot 

occur if a health care provider indicates that a brand-name 

drug is medically necessary. All States allow health care 

providers to specify that a generic drug should not be substituted for a brand-name drug. The ease with which a 

prescriber can do this varies across States. In addition, 

pharmacies might not substitute a generic drug for a host 

of reasons—for example, because the generic drug is temporarily out of stock, customer resistance to receiving a generic drug, or because substituting a generic drug for a 

brand-name one would be less profitable for the pharmacy.88

This section brings together additional analysis about the role 

physicians and pharmacies can play in increasing generics and lowering program costs. 

Physician prescribing practices 

Physician education and prescribing practices have a direct effect 

on the potential impact of any policy change made to benefit design. Outlier physician prescribing can be a result of a number of 

competing factors: patient demand, industry relationships, and 

physician perceptions. It may also result from fraud or abuse, such 

as when drugs are ordered by individuals without prescribing authority. 

Recent HHS OIG reports have identified ongoing significant 

issues with prescription fraud and abuse, as well as with CMS efforts to prevent fraud and abuse in the Part D program. In June 

2013, HHS OIG issued a report entitled, ‘‘Medicare Inappropriately 

Paid for Drugs Ordered by Individuals Without Prescribing Authority.’’ 89 HHS OIG analyzed all Prescription Drug Event records 

from 2009 and matched them to the National Plan and Provider 

Enumeration System to determine the prescriber type, such as physician or dentist. HHS OIG found that CMS inappropriately paid 

for drugs ordered by individuals who clearly did not have the authority to prescribe, such as massage therapists, athletic trainers, 

home contractors, interpreters, and transportation companies. In 

ten States, CMS also inappropriately paid for drugs ordered by 


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90Gregory D. Kutz, Testimony Before the Subcommittee on Federal Financial Management, 

Government Information, Federal Services and International Security, Committee on Homeland 

Security and Governmental Affairs. 91Testimony of: Gary Cantrell, Deputy Inspector General for Investigations, and Stuart 

Wright, Deputy Inspector General for Evaluation and Inspections, Office of Inspector General, 

U.S. Department of Health and Human Services, Hearing: Curbing Prescription Drug Abuse in 

Medicare, Senate Committee on Homeland Security and Governmental Affairs, June 24, 2013. 

other individuals without the authority within those states to prescribe, such as counselors, social workers, and chiropractors. In total, Medicare paid $352 million for Part D drugs ordered by 

the physicians with questionable prescribing patterns in 2009. Notably, 110 of these physicians were associated with 1 or more of the 

retail pharmacies identified as having questionable billing as discussed below. It is important to note that questionable billing does 

not necessarily mean fraudulent billing. However, these patterns 

raise flags that warrant further attention. Tens of thousands of 

these drugs were controlled substances and have the potential for 

abuse. 

OIG recommended that CMS: (1) require sponsors to verify that 

prescribers have the authority to prescribe drugs, (2) increase the 

Medicare Drug Integrity Contractor’s monitoring of prescribers, (3) 

ensure that Medicare does not pay for prescriptions from individuals without prescribing authority, and (4) follow up on the individuals without prescribing authority who ordered prescriptions. CMS 

concurred with all four recommendations. 

In testimony before the Subcommittee on Federal Financial Management, Government Information, Federal Services and International Security of the Senate Committee on Homeland Security 

and Governmental Affairs on October 4, 2011, GAO highlighted 

issues with overprescribing of medications when a beneficiary receives medications from multiple providers. GAO stated that about 

170,000 Part D beneficiaries obtained prescriptions for frequently 

abused prescription drugs from five or more medical practitioners 

during calendar year 2008 at a cost of $148 million.90 Of these, 

about 120,000 were eligible for Part D because of a disability, rather than age. In one instance, a single beneficiary received prescriptions from 87 different medical practitioners in calendar year 2008. 

Whether the individual actually received those medications, or was 

the victim of identity theft, these multiple prescriptions are of concern both from a cost as well as patient-safety perspective. 

While CMS requires Part D plans to perform retrospective drug 

utilization review (DUR) analysis and provide education to prescribers, according to GAO, CMS does not have authority to limit 

the access of individuals, even those known to have obtained the 

same prescription drugs from multiple providers, to either certain 

prescribers or to certain drugs. 

While CMS is responsible for overseeing the program and paying 

plan sponsors, and the plan sponsors are responsible for preventing 

and detecting fraud, waste, and abuse and appropriately paying for 

drugs under Part D, 91 preventing and detecting fraud, waste and 

abuse is a shared responsibility between CMS, contractors, and 

plan sponsors. CMS relies in part on contractors, known as Medicare Drug Integrity Contractors (MEDICs), to investigate fraud. 

Since these contracts were awarded in FY2007, a number of reports have been critical of the MEDICs’ anti-fraud activities. A 

January 2013 OIG report found that only 21 of 223 identified cases 


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92Shrank, W. H., et al., ‘‘Physician Perceptions About Generic Drugs,’’ Annals of 

Pharmacotherapy. Vol. 45, January 2011 (online at http://scholar.harvard.edu/nkc/files/ 

2011_physician_perceptions_about_generic_drugs_annals_pharmacotherapy.pdf). 93McGreevey, S., ‘‘Push for Name-Brand Drugs: Industry Relationships,’’ January 7, 2013. 

Harvard Gazette (online at http://news.harvard.edu/gazette/story/2013/01/push-for-namebrand-drugs/); See Campbell, E. G., Genevieve, P. K., Vogeli, C., & Iezzoni, L., February 11, 

of fraud in Medicare Part D were identified internally, through 

data analysis or other means. Most cases originated from passive 

sources of information, such as complaints received through the 

fraud hotline. 

The reliance of CMS on individual complaints rather than on 

proactive identification described in this report also raises questions about whether CMS has the ability to effectively prevent 

fraud, waste, and abuse in the Part D program, or can only respond once fraud, waste, and abuse has been identified by an external entity or individual. 

CMS’s newly finalized regulation in May 2014 did take a beginning step forward to crack-down on the issue of unauthorized prescribers. Specifically, CMS will require prescribers of Part D drugs 

to enroll in Medicare in order for prescriptions they write to be covered under Part D, which would help to ensure that Part D drugs 

are only prescribed by qualified individuals. In addition, CMS may 

now revoke a physician’s or eligible professional’s Medicare enrollment if: • CMS determines that the physician has a pattern of prescribing Part D drugs that is abusive and represents a threat 

to the health and safety of Medicare beneficiaries, or otherwise 

fails to meet Medicare requirements; • The Drug Enforcement Administration suspends or revokes the physician’s Certificate of Registration; • The applicable licensing or administrative body for any 

state in which a physician or eligible professional practices suspends or revokes the physician or eligible professional’s ability 

to prescribe drugs. 

Physician education should be addressed 

The FDA and plan providers have used a number of different 

strategies to educate physicians about generic drugs—such as distributing generic drug samples. However, despite these efforts, 

some studies suggest that physicians have lingering concerns about 

the quality or efficacy of generic drugs despite scientific data to the 

contrary. For instance: • In a 2011 survey of physicians, about 25 percent of physicians reported that they strongly or somewhat disagreed with 

the statement, ‘‘I believe that generic medications are as effective as branded medications,’’ while about half of respondents 

agreed strongly or somewhat with the statement, ‘‘I am concerned about the quality of generic medications.’’ 92

• A survey of 1,891 physicians showed that prescribing behavior shifted in a manner consistent with the number of years 

of medical practice. Thirty-one percent of physicians in practice 

10 years or less ‘‘sometimes’’’ or ‘‘often’’ prescribed name-brand 

medications when patients requested them even when comparable generic drugs were available. The percentage increased 

to 36 percent of physicians in practice for 11 to 30 years and 

43 percent of physicians in practice more than 30 years.93


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2013, supra; See Campbell, E. G., Rao, S. R., DesRoches, C. M., Iezzoni, L. I., Vogelia, C., 

Dragana, B. J., et al., ‘‘Physician Professionalism and Changes in Physician-Industry Relationships from 2004–2009.’’ Archives of Internal Medicine. 2010; 170 (20): 1820–1826. 94Ostini, R., et al., ‘‘Systemic Review of Interventions to Improve Prescribing,’’ Annals of 

Pharmacotherapy, March 2009. Vol. 43, No. 3: p. 502–13. 95 id. 96 Campbell, E. G., Genevieve, P. K., Vogeli, C., & Iezzoni, L., February 11, 2013, supra. 97 id. 98 Hoadley, J., Summer, L., Hargrave, E. & Cubanski, J., December 11, 2013, supra. 99MedPAC, June 2013, supra at p. 163. 100Department of Health and Human Services, Office of the Inspector General, OIG Retail 

Pharmacies with Questionable Part D Billing, May 2012, p. 2 (online at https://oig.hhs.gov/oei/ 

reports/oei-02-909-00600.pdf). 

An effective way of altering prescribing behavior involves providing physicians with individual feedback.94 A study about interventions designed to change provider prescribing behaviors determined that educational outreach as well as audit and feedback 

most consistently resulted in positive results.95

Recent studies have also demonstrated differences in prescribing 

patterns based on the nature of the relationship between physicians and the pharmaceutical industry, as well as whether the physician is a member of a managed care organization. A study published in JAMA found that physicians receiving industry-provided 

food or beverages in the workplace or drug samples are significantly more likely to accede to patient demands for brand-name 

drugs. Also, physicians who meet with industry representatives for 

periodic meetings are more likely to give in to patient requests for 

brand names.96

In addition, a physician’s membership in a managed care organization may impact prescribing patterns.97 Between 2007 and 2010, 

the use of generic drugs among beneficiaries enrolled in MA–PD 

plans consistently exceeded that of beneficiaries enrolled in PDP 

plans by 5 percent. This occurred despite: (1) high MA–PD plan 

copays for generic drugs and (2) PDP plans applying utilization 

management tools (like quantity limits and prior authorizations) to 

more drugs than MA–PD plans.98 In 2013, for example, median copays for generic drugs in PDPs were $2 for the preferred generic 

tier and $5 for the non-preferred tier. MA–PD plans with two generic tiers charged $3 for drugs in the preferred generic tier and 

$10 for drugs in the non-preferred tier. 

One of the factors which may affect the increased rate of generic 

prescribing among MA–PD plans is that fewer LIS beneficiaries 

tend to enroll in MA–PD plans. Over 80 percent of beneficiaries 

with high prescription drug costs are LIS beneficiaries. Four out of 

five LIS beneficiaries, or 18 percent of all Medicare beneficiaries, 

were enrolled in stand-alone PDPs, and the remaining (5 percent 

of all Medicare beneficiaries) were enrolled in MA–PD plans.99

Pharmacy billing practices 

Pharmacies are responsible for dispensing prescription drugs to 

beneficiaries. Plan sponsors contract with pharmacies to provide retail, long-term-care, and mail-order services.100 Pharmacies report 

to and bill sponsors for any drugs dispensed for their beneficiaries. 

Sponsors aggregate this data into ‘‘prescription drug event’’ (PDE) 

files that are sent to CMS for reimbursement. 

Sponsors rely on pharmacies to provide them with accurate information about the drugs they dispense, but CMS has identified several instances of questionable Part D billing by pharmacies. In a 


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101 id. 102 United States ex rel. Fox Rx, Inc. v. Walgreen Co., No. 12–cv–07382–RA (S.D.N.Y. Oct. 1, 

2013). 

May 2012 review, the HHS OIG strongly recommended additional 

auditing of retail pharmacies with Medicare Part D billing. HHS 

OIG (using data from 2009) issued a report that found that: 

• Over 2,600 retail pharmacies—representing about 4 percent of all pharmacies nationwide—exhibited signs of questionable billing practices. Together, they billed Part D approximately $5.6 billion. While some of this billing may be legitimate, all pharmacies that bill for extremely high amounts warrant further scrutiny. 

• Over 400 pharmacies billed for an extremely high percentage of brand-name drugs. One pharmacy reviewed had 99 percent of its prescriptions dispensed for brand-name drugs. Billing for a high percentage of brand-name drugs may indicate 

that a pharmacy is billing for brand names but dispensing 

generics. 

While questionable billing does not necessarily mean fraudulent 

billing, these patterns raise flags that warrant further attention. 

The HHS OIG recommended that CMS take a number of steps to 

strengthen the monitoring of pharmacies, including: 101

• identifying pharmacies with questionable billing practices 

for further review; 

• providing additional guidance to sponsors on monitoring 

pharmacy billing; 

• requiring sponsors to refer potential fraud and abuse incidents that may warrant further investigation; 

• developing risk scores for pharmacies; and 

• following up with pharmacies identified as having questionable billing. 

In some situations, questionable pharmacy billing practices could 

thwart efforts that have been made to incentivize generics. For example, a lawsuit has been filed in the Southern District of New 

York by an insurance company, for itself and on behalf of the federal government and several states, against Walgreens pharmacies 

for alleged misconduct in using ‘‘Dispense as Written’’ (DAW) codes 

in their submission of claims for brand-name drugs.102 The lawsuit 

alleges that the pharmacy misused codes related to the dispensing 

of brand-name drugs when substitution with generic drugs was 

mandated under Medicaid and Medicare, as well as required under 

certain states’ laws. 

CMS finalized regulatory guidance in May 2014 that takes a step 

to better monitor pharmacy billing, as it provides direct access to 

data from sponsor downstream entities, including pharmacies. Currently, it can take a long time for CMS’s contractors (who are often 

assisting law enforcement) to obtain important documents like invoices and prescriptions directly from pharmacies, because they 

must work through the Part D plan sponsor to obtain this information. However, the new guidance would provide CMS, its antifraud 

contractors, and other oversight agencies the ability to request and 

collect information directly from pharmacy benefit managers, pharmacies, and other entities that contract or subcontract with Part D 


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103Department of Health and Human Services, Centers for Medicare and Medicaid Services. 

Medicare Program; Contract Year 2015 Policy and Technical Changes to the Medicare Advantage and the Medicare Prescription Drug Benefit Programs. January 10, 2014, supra. 

sponsors.103 This proposal is designed to provide more timely access to records—including for investigations of fraud and abuse— 

and responds in part to recommendations made by HHS OIG. 

CONCLUSION 

The Committee finds that for continued savings to be achieved 

in the Part D program without harming beneficiaries, more unconventional strategies will be needed, and beneficiaries must be seen 

and treated as partners in any savings that are achieved. 

Future actions to maximize generics use should focus on beneficiary education and greater access to medication management 

therapy. Existing program tools—like the Medicare Plan Finder— 

can and should evolve to play a role in encouraging beneficiaries 

to weigh not only coverage options, but also potential savings opportunities. Further, in order to encourage seniors to switch to 

lower-cost drug options where appropriate it will be necessary to 

ensure that savings are felt not only by the federal government, 

but also beneficiaries. In addition, CMS will need to investigate 

questionable pharmacy billing practices when there are suspicions 

of fraud, waste, or abuse. 

It is the Committee’s hope that this report offers a starting place 

to help Members of Congress and the health care community to develop new and innovative ideas outside the traditional benefit 

structure to promote greater adherence and access to affordable, 

quality prescription drugs in the Part D program. 


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